Suspension sends a powerful message to BP

Wednesday’s sale of federal offshore oil and gas leases in the Gulf of Mexico may offer a glimpse of what’s to come. BP wasn’t there.

While BP’s absence apparently was voluntary, the next time it may not be on the sidelines by choice. The day of the auction, the U.S. Environmental Protection Agency temporarily suspended the company from bidding on new federal contracts, which would include oil and gas leases.

The suspension came amid a week dominated by arraignments in BP’s criminal case related to the Deepwater Horizon. While BP’s settlement terms in that case – 14 guilty pleas, $4.5 billion in fines – are part of its punishment, the EPA’s decision sends a far stronger message.

Rarely, if ever, has the government come down so harshly on such a large company. Then again, rarely has a company so persistently defied federal orders to improve safety. BP’s agreement to guilty pleas last week caps a decade in which it had repeatedly fun afoul of safety and environmental regulations in its refining and pipeline operations.

“It’s fairly unusual for a company the size of BP to be suspended,” said Daniel Gordon, who was the administrator of federal procurement policy before joining the George Washington University Law School faculty in January. “A suspension means the government takes the matter of a corporation’s behavior very seriously.”

The decision could affect BP’s plans to expand drilling operations in the Gulf of Mexico and cost it billions in government business. That’s why, as I noted when the settlement was announced, the felonies in the case matter more than fines.